Correlation Between Berkshire Hathaway and L3Harris Technologies,

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and L3Harris Technologies, at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Berkshire Hathaway and L3Harris Technologies, into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berkshire Hathaway and L3Harris Technologies,, you can compare the effects of market volatilities on Berkshire Hathaway and L3Harris Technologies, and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Berkshire Hathaway with a short position of L3Harris Technologies,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and L3Harris Technologies,.

Diversification Opportunities for Berkshire Hathaway and L3Harris Technologies,

0.62

Correlation Coefficient

Berkshire Hathaway  L3Harris Technologies,

Poor diversification

The 3 months correlation between Berkshire and L3Harris is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and L3Harris Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies, and Berkshire Hathaway is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Berkshire Hathaway are associated (or correlated) with L3Harris Technologies,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies, has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and L3Harris Technologies, go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and L3Harris Technologies,

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.71 times more return on investment than L3Harris Technologies,. However, Berkshire Hathaway is 1.41 times less risky than L3Harris Technologies,. It trades about 0.16 of its potential returns per unit of risk. L3Harris Technologies, is currently generating about 0.04 per unit of risk. If you would invest  12,515  in Berkshire Hathaway on October 8, 2024 and sell it today you would earn a total of  1,569  from holding Berkshire Hathaway or generate 12.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Berkshire Hathaway  vs.  L3Harris Technologies,

Berkshire Hathaway

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Berkshire Hathaway sustained solid returns over the last few months and may actually be approaching a breakup point.

L3Harris Technologies,

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in L3Harris Technologies, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, L3Harris Technologies, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Berkshire Hathaway and L3Harris Technologies,

The main advantage of trading using opposite Berkshire Hathaway and L3Harris Technologies, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, L3Harris Technologies, can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in L3Harris Technologies, will offset losses from the drop in L3Harris Technologies,'s long position.

The idea behind Berkshire Hathaway and L3Harris Technologies, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.